Does Duluth signal a turning point in downtown retail? Experts weigh in

This Wisconsin retailer is opening at 111 W. Main St. | Courtesy of Duluth Trading Co.

Duluth Trading Co. will be the first department store to open in the Central Business District in more than a dozen years.

The company and the location have generated excitement, but will this create a domino effect of other similar retail companies locating in Louisville’s downtown? Experts say that while retailers may follow, it will be a gradual process that could take years.

“We’re very excited to have Duluth Trading Co. coming to Kentucky,” said Sarah Rowlette, director of communications with the Kentucky Retail Federation. “It will be a nice addition to downtown to add a bigger retail name.”

In a statement, Louisville Mayor Greg Fischer said a national retailer entering the downtown market is “another positive step for the resurgence of downtown.”

But the announcement is just that, a single step, experts say.

Jose Fernandez | Courtesy of the University of Louisville

“This is a good signal,” said Jose Fernandez, associate professor of economics at the University of Louisville. “However, it can’t happen on its own. You need to create some additional synergies.”

Outside of work, people come downtown to eat at restaurants, go to bars and attend shows and sporting events. While there are small retailers spread throughout downtown, it is not a major retail hub.

“You need to have another anchor. You need to give people a reason to park their car, get out and walk around,” Fernandez said. “I don’t see people driving downtown to get underwear when they can buy it online. …It’s going to take a buckshot.”

He added that he’s noticed more people walking around downtown on weekends than in the past, but it might not be enough yet for retailers who rely on foot traffic to make sales.

“I see more foot traffic on the weekends now, but it needs to be consistent for these retailers to survive,” Fernandez said.

Despite all the momentum downtown — from the multiple luxury apartment and hotel projects in the works to developments like 111 Whiskey Row — economic growth takes time.

“The store itself may not be the game-changer, but it’s a vote of confidence,” said Mekael Teshome, assistant vice president and economist for The PNC Financial Services Group. Pair that with Louisville’s good demographics and job growth, “it really signals that there is forward momentum that could attract further investment.”

Teshome expects to see continued healthy job growth and some income growth in Louisville this year, which makes for a good environment for the retail industry.

Still, big-box retailers have taken a hit in recent years with chains such as HHGregg, Kmart, Macy’s, American Apparel and The Limited closing all or some of their stores and leaving thousands of square feet of empty retail space. With online sales growing rapidly year over year, Teshome said, downtown Louisville will never return to what it was once decades ago with department stores littering heavily trafficked corners.

Mekael Teshome | Courtesy of PNC

A big part of the retail equation is getting more people to move into the Central Business District.

“What we have seen is, with a generational transition and millennials being a larger part of the workforce, there is a desire to move closer to the city,” Teshome said. “We are going forward to a new era with that urban core being revitalized.”

He admits that he is an optimist when it comes to residents returning to downtowns.

Fernandez is less optimistic, saying the companies developing luxury apartments in and near downtown must know something he doesn’t.

“I see luxury apartments downtowns, I wonder who’s filling them,” he said, adding that the mortgage on his house in Cherokee Triangle is cheaper than some of the rents that the developers plan to charge.

Plus, the lack of a grocery in the Central Business District is a notch against downtown living, Fernando said.

“I don’t see it as a high residence place without a grocery store,” he said. “We need a retail synergy if we are going to see more people living down there.”

Louisville Forward, the city’s economic development arm, expects to see more retailers open in the Central Business District, particularly once the apartment buildings come online.

“This is a national progression for the retail to follow, and that’s a result of not only the increase in downtown living and the apartments you see going up but also this incredible tourism boom that we have,” said Mary Ellen Wiederwohl, chief of Louisville Forward.

However, Wiederwohl was cautious to say that downtown and Louisville, in general, will have to be much more densely populated with residents and workers before some major retailers would even look at Louisville.

“We always get ‘Why don’t we have’ — fill in the blank,” she said, adding that IKEA and Crate & Barrel top the list.